Question Presented

Must an insurer of a commercial policy subject to N.Y. Ins. Law § 3426
(McKinney Supp. 2004) provide any advance notice if upon renewal the insurer wishes to
require the full annual premium in a context where the insured has been permitted to pay
the premium in four installments during the previous required policy periods?

Conclusion

No. An insurer would not be required to provide any advance notice,
including a conditional notice upon renewal.

Facts

(e)(1) A covered policy shall remain in full force and effect pursuant
to the same terms, conditions and rates unless written notice is mailed or delivered by
the insurer to the first-named insured, at the address shown on the policy, and to such
insured's authorized agent or broker, indicating the insurer's intention: . . .

(B) to condition its renewal upon change of limits, change in type of
coverage, reduction of coverage, increased deductible or addition of exclusion, or upon
increased premiums in excess of ten percent (exclusive of any premium increase generated
as a result of increased exposure units, pursuant to subsection (d) of this section, or as
a result of experience rating, loss rating, retrospective rating or audit), except that
with respect to an excess liability policy, the insurer may also, consistent with
regulations promulgated by the superintendent, condition its renewal upon requirements
relating to the underlying coverage, in which event the conditional renewal notice shall
be treated as an effective notice of nonrenewal if such requirements are not satisfied as
of the later of the expiration date of the policy or sixty days after mailing or delivery
of such notice. . . .

Section 3426(e)(1)(B) does not require that an insurer of a commercial
policy subject to Section 3426 provide a conditional notice if the insurer would change
the payment of premium from installments to an annual premium upon renewal. There are no
other provisions of the Insurance Law or Insurance Department Regulations that require an
insurer of a commercial policy to provide advance notice if the insurer wishes to change
the payment of premium from installments to an annual premium upon renewal. Note that this
opinion does not address an insurer of a commercial policy subject to Section 3426 that
changes the payment of premium from installments to an annual premium prior to the
policy's renewal--i.e., "mid-term".

For further information you may contact Senior Attorney Robert Freedman
at the New York City Office.